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25 December, 05:32

When a certain competitive firm produces and sells 100 units of output, marginal revenue is $80. when the same firm produces and sells 200 units of output, what is average revenue?

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  1. 25 December, 08:07
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    When the firm sells 100 units of output; the marginal revenue is $80.

    When the firm sells 200 units of outpit: the marginal revenue is X.

    So cross multiplying the revenue we have 100X = 80 * 200.

    X = 200 * 80 / 100 = 16000/100 = $160. To calculate the average revenue,

    we need to know the total revenue.

    Total revenue is the Price (P) * Total output (Q).

    So we have (80 * 100) + (160 * 200) = 8000 + 32000 = 40000.

    So the average revenue = Total revenue / Total output = 40000 / (100 + 200) =

    133.33
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